33.2 Types of Licenses
Key Takeaways
Major lines of authority include life, health, property, and casualty.
Limited lines cover specific products like credit, travel, or crop insurance.
Surplus lines require separate licensing and place coverage with nonadmitted insurers.
Temporary licenses may be issued in limited circumstances.
Nonresident licenses allow producers to sell in other states with reciprocity.
Appointments authorize a producer to represent a specific insurer.
Insurance licenses are issued for specific lines of authority—the types of insurance a producer is authorized to sell.
Major Lines of Authority
Life Insurance License
| Aspect | Details |
|---|---|
| Products Covered | Term life, whole life, universal life, variable life* |
| Related Products | Annuities (fixed), credit life |
| Exam | Life insurance examination |
| Special Note | *Variable products require securities license |
Health (Accident and Health) License
| Aspect | Details |
|---|---|
| Products Covered | Medical, disability, long-term care |
| Related Products | Medicare supplements, dental, vision |
| Exam | Health/Accident & Health examination |
| Alternative Names | Accident & Sickness, Accident & Health |
Combined Life and Health License
Many states offer a combined Life, Accident, and Health license that authorizes the sale of both life and health products with a single license.
| Feature | Details |
|---|---|
| Scope | All life and health products |
| Exam | Combined examination |
| Advantage | Broader product authority |
| Pre-Licensing | May require more hours |
Specialty Licenses
Variable Products License
Selling variable insurance products requires additional licensing:
| Requirement | Details |
|---|---|
| Insurance License | Life insurance license required |
| Securities License | FINRA registration (Series 6 or Series 7) |
| Investment Adviser | May also need Series 63/65/66 |
| Products | Variable life, variable annuities |
Exam Tip: Variable products involve investment risk and are considered securities. A producer must hold BOTH an insurance license AND a securities license to sell them.
Long-Term Care Partnership Program
Some states require special certification for producers selling Partnership LTC policies:
| Requirement | Details |
|---|---|
| Initial Training | 8 hours of LTC training |
| Ongoing Training | 4 hours per renewal cycle |
| Topics | LTC products, regulations, suitability |
Key Takeaways
- Major lines of authority include life, health, property, and casualty.
- Limited lines cover specific products like credit, travel, or crop insurance.
- Surplus lines require separate licensing and place coverage with nonadmitted insurers.
- Temporary licenses may be issued in limited circumstances.
- Nonresident licenses allow producers to sell in other states with reciprocity.
- Appointments authorize a producer to represent a specific insurer.
Other License Types
Limited Lines Licenses
| License Type | Products Covered |
|---|---|
| Credit Insurance | Credit life, credit disability |
| Travel Insurance | Trip cancellation, travel medical |
| Rental Car Insurance | Collision damage waiver |
| Pet Insurance | Animal health coverage |
| Title Insurance | Real estate title protection |
Surplus Lines License
| Feature | Details |
|---|---|
| Purpose | Place coverage with non-admitted insurers |
| When Used | Standard market cannot provide coverage |
| Requirements | Separate license, additional training |
| Regulations | Different rules than admitted insurers |
Producer vs. Other Roles
| Role | Definition | License Required? |
|---|---|---|
| Producer | Sells, solicits, or negotiates insurance | Yes |
| Consultant | Advises for fee (doesn't sell) | Varies by state |
| Adjuster | Investigates and settles claims | Separate adjuster license |
| Customer Service Rep | Administrative support only | Generally no |
Agent vs. Broker
| Aspect | Agent | Broker |
|---|---|---|
| Represents | Insurance company | Consumer/client |
| Appointment | Appointed by insurers | May work with multiple insurers |
| Authority | Acts on behalf of insurer | Acts on behalf of client |
| Duty | Owes duty to insurer | Owes fiduciary duty to client |
Key Point: The distinction between agent and broker affects who the producer represents and their legal duties. Brokers typically owe a higher fiduciary duty to clients.
Key Takeaways
- Major lines of authority include life, health, property, and casualty.
- Limited lines cover specific products like credit, travel, or crop insurance.
- Surplus lines require separate licensing and place coverage with nonadmitted insurers.
- Temporary licenses may be issued in limited circumstances.
- Nonresident licenses allow producers to sell in other states with reciprocity.
- Appointments authorize a producer to represent a specific insurer.
To sell variable life insurance, a producer must have:
Only a life insurance license
Only a securities license
Both a life insurance license and a securities license
A special variable products license instead of other licenses
Which of the following would require a surplus lines license?
Selling standard term life insurance
Placing coverage with a non-admitted insurer
Selling Medicare supplement policies
Adjusting property damage claims
What is the primary difference between an insurance agent and an insurance broker?
Agents work full-time, brokers work part-time
Agents represent the insurer, brokers represent the client
Agents sell life insurance, brokers sell health insurance
Agents are licensed, brokers are not
Sections you finish are checked off in the contents.